Dive Brief:
- Kyndryl expanded its partnership with Microsoft to extend its hybrid cloud integration services across distributed environments, the companies said in a Tuesday announcement.
- The IT services provider will leverage the hyperscaler’s adaptive cloud methodology and Azure Arc and Azure Local platforms to help clients cultivate hybrid interoperability between on-premises and cloud-based applications. Initial use cases are designed for retail, manufacturing, energy and healthcare organizations, according to the announcement.
- Kyndryl forged an alliance with Microsoft shortly after IBM completed its spinoff of the company in November 2021. “We have doubled down in a variety of domains,” Giovanni Carraro, SVP of global strategic alliances at Kyndryl, told CIO Dive, pointing to joint mainframe modernization, cybersecurity and SAP ERP migration services. “Unifying operations across hybrid multicloud environments is a critical area for our customers.”
Dive Insight:
Kyndryl built its IT services and consulting business around helping enterprises navigate to the cloud through thickets of legacy applications and on-premises infrastructure. Hyperscaler partnerships, including the longstanding pact with Microsoft, provide Kyndryl with resources to ease client modernization journeys while driving up cloud consumption.
Hybrid estate management expertise has been a boon to Kyndryl in the short time since the spinoff. The company ended its 2025 fiscal year in the black with net income of $68 million for the three months ending March 31, compared with a net loss of $45 million a year ago.
“Our alliances with hyperscalers and leading technology providers are extensive and continually expanding,” Kyndryl Chairman and CEO Martin Schroeter said during the company’s Q4 2025 earnings call last week. “We are uniquely positioned to address the secular IT trends like cloud migration, increasingly hybrid IT environments, cybersecurity risks and the adoption of AI.”
Kyndryl’s hyperscaler-related revenues more than doubled to $1.2 billion in FY2025 as revenues grew 25% year over year. As enterprises invest in data modernization to fuel generative AI adoption, Kyndryl expects revenues tied to its cloud alliances to grow another 50% in the next fiscal year to roughly $1.8 billion, CFO David Wyshner said during the earnings call.
“Every company in the world is having an AI conversation, looking into what they can do and where they can go with AI, but they are struggling with adoption because of their legacy systems,” Carraro said.
